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House’s president-elect to establish zero-based budget

By on November 14, 2016

Newly elected House Speaker Carlos "Johnny" Méndez announces new committee appointments.

Newly elected House Speaker Carlos “Johnny” Méndez announces new committee appointments. (CB photo/ Limarys Suárez Soto)

SAN JUAN – Newly elected House Speaker Carlos “Johnny” Méndez assured that the next budgets of the Puerto Rican government will be zero-based, which means all agencies will first have to justify their expenses before requesting an allocation of funds from the legislature.

At a Capitol press conference Monday to present the future presidents of the Treasury and Government committees, Antonio “Tony” Soto and Jorge “Georgie” Navarro, respectively, the newly elected speaker pointed out that all agency heads will have to justify expenses and that the practice of hiding items in alleged recurrent expenses is over.

“The heads of agencies will no longer come here to ask excessively. They will have to justify each of their expenses before the House of Representatives, and those are the instructions given to [Treasury Committee Chairman] ‘Tony’ Soto. Our goal is to make government more agile, but at the same time protect the jobs of our public servants,” said the president-elect of the House, who will take office Jan. 2.

Méndez specified that for the budget for the next fiscal year to be presented by Gov.-elect Ricardo Rosselló in the House of Representatives, its Treasury Committee will evaluate what the agencies’ real spending needs are.

“We’ll tell agency heads, ‘You brought your script but we are going to break it down here to know what your needs are.’ That practice of presenting a budget and hiding other expenses in line items will be eliminated. For example, agencies always have vacant posts, but a budget is always assigned to cover them, but the post may not be filled that year but the money is there. Now they are going to have to come to us to justify every single dollar. It won’t be about pulling that trick,” Méndez added.

In fiscal terms, the speaker’s priorities are to guarantee payroll, ensure payment to the Retirement System, ensure utility payments, obligations, the payment that must be met to maintain the island’s financial credibility, and after these, everything else is directed toward the services provided by the government.

“That’s why we have to justify every dollar,” he reiterated.

What will the legislative agenda be in terms of the 90 taxes the New Progressive Party (NPP) criticized so much of the current administration and which of these specific taxes will be reverted, Caribbean Business asked.

“Gov.-elect Ricardo Rosselló has in his plan and we will also review the 90-plus taxes, and all those that aren’t tied up guaranteeing a bond issuance, we will evaluate one by one because eventually we have to reduce government spending first and then gradually eliminate those taxes,” Méndez said.

Does that include the petroleum-products tax hike, aka la crudita, Caribbean Business asked.

“La crudita is one that, in its second version was done to guarantee an issuance that was never carried out and that money is supposed to be deposited in the GDB [Government Development Bank]. We are going to see what has been done with that money, which was to guarantee the payment of an issuance. Anything indicating that money has been used without the consent of the Legislative Assembly has criminal consequences. It’s not that we are on a witch hunt, it’s that we must be responsible with the administration of the government,” Méndez stressed.

Soto, the Treasury Committee’s designated chairman, added that there are taxes that guarantee some bond issuances and serve to pay incurred debts, “and those can’t be touched.”

“There are other [taxes] that won’t, and everything will be on the table. Our responsibility is to, from the Treasury Committee, make Ricardo Rosselló’s plan a viable one, and that implies that if you have economic sectors that are being overburdened in taxes and we can redistribute that burden or be more efficient capturing some of those taxes, we would have sufficient revenue to lower tax rates and promote economic development. In short, that will be the vision of the Treasury Committee in relation to taxes, and that can be called the tax reform,” Soto said.

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